ISRAEL Law and Practice Contributed by: Barak Platt, Micki Shapira, Liron Hacohen and Nataly Margalit, Arnon, Tadmor-Levy
Arnon, Tadmor-Levy Azrieli Center Tel Aviv Israel
Tel: +972 3 608 7777 Fax: +972 3 608 7724 Email: info@arnontl.com Web: www.arnontl.com
1. Trends 1.1 M&A Market
payments and contingent consideration tied to regula - tory approvals or commercial performance. Reflecting a broader shift in deal structuring, earn-out mecha - nisms – long associated with medical device and life sciences transactions – gained meaningful traction in pure-play technology deals, as buyers and sellers sought common ground on valuation in the absence of consensus on growth trajectories. Regulatory scrutiny continued to intensify in 2025. Transactions were subject to longer review periods, particularly in sectors involving critical infrastructure, data, defence-related technologies and highly con - centrated markets. This led parties to allocate regu - latory risk more explicitly in transaction documents, including through reverse break fees, extended long- stop dates and conditional pricing mechanisms. Due diligence in 2025 was more operational and for - ward-looking. Buyers placed heightened emphasis on intellectual property robustness, employee retention and incentive structures, cybersecurity resilience and supply-chain continuity. In technology transactions, particular attention was paid to AI-related assets, data usage rights and compliance with evolving global reg - ulatory frameworks. Israeli acquirers played a meaningful role in 2025, representing 35% of acquisitions of technology com - panies based on publicly available information, the highest share in the past five years, reflecting both strategic consolidation by domestic players and increased confidence in local deal-making despite ongoing market volatility. Prominent examples of sig - nificant M&A transactions between Israeli companies
In 2025, the Israeli M&A market was characterised less by shock resilience and more by selective confi - dence. While geopolitical and security considerations remained an underlying feature of the market, deal- making largely adjusted to a “new normal.” Buyers and sellers were no longer postponing transactions due to uncertainty but instead were structuring deals to accommodate it. M&A activity in 2025 was driven primarily by strate - gic transactions in the technology sector, with foreign buyers continuing to view Israel as a critical source of innovation. At the same time, domestic consolidation in concentrated markets, particularly where regulatory constraints and capital requirements limited organic growth. Venture-backed companies that raised capi - tal at peak valuations in prior years increasingly pur - sued exits in 2025, contributing to a steady pipeline of transactions. Notably, not all exits took the form of headline acquisitions: acqui-hires and targeted asset purchases at more modest valuations became an increasingly visible feature of the market, as interna - tional players sought to secure Israeli engineering and R&D talent without underwriting full company valua - tions. 1.2 Key Trends Valuation discipline was a defining feature of Israeli M&A transactions in 2025. Buyers were increasingly unwilling to underwrite aggressive growth assump - tions, leading to greater reliance on deferred consid - eration mechanisms such as earn-outs, milestone
635 CHAMBERS.COM
Powered by FlippingBook